the time is 6.45. This is a special study session for the City of Emeryville. Madam clerk the role. Council member Prifors. Here. Council member Solomon. Here. Council member Welch. Here. Vice Mayor Card. Present. And Mayor Moira. Here. Members any exparte communications. Seeing and hearing none, we'll move to public comment. Seeing no members of the public, we will move to item 6.1, the study session on the city budget. Good evening mayor, members of council, Brian Moira from Regional Government Services Financial Consultant to the City. And tonight we are here to talk to you about the 2025-27 proposed budget for all funds in the city. Next slide. To give you just a brief background on the process, the City Manager works with the finance department and the city department had team to develop a biennial budget every two years. This process has been underway since December to develop this upcoming budget. At your last council meeting on May 6th, the council reviewed the five year general fund financial model used to develop the budget. And the council's comments and guidance from that meeting are included in the budget document and in tonight's presentation. One of the new features this year in the budget is the creation of a city strategic plan. This was done by the council department head team and the city manager in March reviewing the city's goals, aspirations and projects and again the pros budget reflects the results of that process as well. Next slide. Okay, we'll go on to the following slide. And this is an overview of the citywide revenues expenses for all funds in the two-year budget in the first year. The revenues are projected at 116.5 million and expenditures at 143.5 million. In the second year of the two-year budget, revenues come in at 109.2 million and expenditures at 144.4 million. It's worth noting when you look at the citywide numbers, they reflect also the capital improvement budget. So when you do have major capital improvements in Sundance, this is going to be spending more revenues than you receive in a given year across all the funds. Next slide. In terms of citywide staffing, the proposed budget funds 174.61 full time equivalent positions in both years. This includes 140 FTEs in the general fund, 34.61 FTEs and special revenue and enterprise funds and two positions in public works and community development that are funded out the quarter cent measure F sales tax. In terms of staffing changes from the prior budget, this budget has two fewer positions, namely eliminating the deputy community development director position and the senior building official position. Next slide. So now we move on to a discussion of the 2527 general fund budget. Revenues in the first year are projected at 46 million and expenditures at 55.7 million. This is resulting in a deficit of 9.7 million. This is an increase over the current fiscal year deficit of 8.8 million prior to adjustments. And then in the second year we're showing revenues at 47.6 million and expenditures at 57.5 million for a $9.9 million. Next slide. This is a pie chart showing the revenues in the general fund. And let's go to the next slide. One of the things that's interesting in this particular section of the budget and worth noting, and we've talked about this a bit before, is the shift in how the general fund has been funded over the last several years and we've talked about the fact that in particular your development fees and your fees and charges vary. So you'll notice in the first column under 2022-23 you had $12.7 million and fees in charge revenue. In this year you're at $4. million, and you'll see that over the balance of the budget projections, it drops all the way down to about 3.3 million. So we're in a very different place than the city was in 2020, 22, 23. And again, this shows the sort of rural coaster or up and down trending of your development fees. What's interesting in the coming two years in 25, 6, and 26, 7, I would say that the composition of your general fund is actually much more like other cities in general, because now instead of your leading revenue being development fees, they're actually property taxes. And your second largest revenue is business license, taxes, and card room fees. And the third largest is sales tax and the fourth is hotel tax, which again, if you looked at other communities, that's a little more typical than how Emeryville has been funded in the past. Next slide. And this is a look at expenditures. This is similar to prior years, and again, also similar to other communities where the bulk of your general fund expenditures are in public safety, namely police and fire, with the balance showing up in the other departments as you can see, next slide. So in terms of the general fund, multi-year projections, we talked a little bit about this at your last meeting. The five-year projection shows a deficit of anywhere from 9.7 million in the first year to 14.6 million over the five-year period. However, it's worth noting that for purposes of tonight's discussion and the budget adoption at your following meeting, we're really focusing only on the first two years, although obviously it's wise to keep an eye on what's happening after that period. The key factors here are for the most part that your fees and sales tax revenues are projected at a flat rate. The one thing I would note is that the city did experience some growth. At the Christmas quarter, the fourth quarter sales tax was up about 6% on an adjusted basis. We're expecting within the next week or two to get the first quarter sales tax results from the state we're very curious to see if that is also either flat or growing prior to the Christmas quarter, Emoryville and for that matter, most of the cities at Alameda the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of in terms of what might actually happen versus what's in the document, the deficit could go down if revenues come in ahead of projections. And if you have any one time bumps in revenue as you had this year with the the Sutter revenue. On the other hand, the deficit could worsen if things like the impact of the tariffs and the downturn and the economy, both locally and nationally continue if the declining consumer confidence continues. And if the stock market downturn results in per's rate increases, the per's areas when we're watching the initial tariffs resulted in a loss to the CalPERS fund of about $25 billion. However, since that time, and since the tariffs have been suspended temporarily, CalPERS's returns are now increasing. So we're kind of waiting to see what's going to shake out by June 30th. So that one's kind of a question mark, I guess we would say. Next slide. And again, to recap, the general fund challenges and sort of what we're recommending is in the first year the $9.7 million dollars, that will be offset by the money in the general fund on a signed balance primarily due to both the adjustments the council made this March and the unanticipated payments from Sutter and then in the second year it will be offset again by the general fund balance and then four million dollars from the economic uncertainty reserve. However in years three through five which again we're not discussing at this point but something to keep an eye on if nothing else changes the city will need to explore either revenue measures and or budget cuts to offset those as the deficit continues to increase. Next slide. And then this is the five year forecast we talked about the last meeting. Next slide. And this is also from last time kind of highlighting the current situation. The next slide. And then this is the five year forecast we talked about the last meeting. Next slide. And this is also from last time kind of highlighting for you the actions that the council took both on March 4th to address the current year deficit and also the impacts of the Sutter revenue. Next slide. Last time around the council talked a bit about the opportunity for revenue measures and again we're continuing to develop this information and we'll have it for you in the fall. Next slide. Since you met, we did meet with the budget advisory committee and they had a number of recommendations for the council related to the five year model and these focused again mostly on the in the revenue arena. The things the five things that they six excuse me six things they talked about were one recommending that the city pursue an annual payment in lieu of taxes so called pilot agreement with suitor health. They felt it was more advisable to take an annual revenue amount rather than a lump sum. Something I know the council members talked about at your last meeting. Second, they felt that in terms of looking at revenue measures, they would prioritize the business license tax and the choice of a parcel tax or community facilities district when studying revenue options. The committee noted that if in fact those two items were prioritized by the council and before the voters and adopted that those two measures alone would offset most of your projected deficit over the five year period. They also felt that the consideration of an increase in the hotel tax, the so-called transient occupancy taxes, another revenue area to explore in an early stage. Third item was they felt that the opportunity for a quarter cent local sales tax and a increase in the utility tax were not as desirable in terms of revenue options and they would consider them as sort of lower priority as far as their recommendations. They did want to make sure that any study of the business license tax included in analysis of how businesses would be affected by those changes. And also they wanted to see data on the tax amounts being charged by your nearby cities for the various revenue options. And finally wanted to see how these increases would affect both residents and businesses. And I'd say all three of those last points are will obviously be part of any revenue analysis that we do next slide. So in terms of recommendations and next steps for tonight, first we're recommending that the council review discuss and provide direction to the proposed 2527 budget document that you have before you tonight. And second, we will present a final version of the budget taking into account your direction from tonight. In any comments, we get from the budget advisory committee or the budget and governance committee in the final document, which will be before you at the following meeting. And then moving on to next steps, just to next slide. To provide kind of a calendar of events. Later this week, we will be meeting with the Budget Advisory Committee going through a similar presentation that you're seeing tonight on the budget. And then on the 27th, the same thing for budget and governance and then June 3rd would be the final adoption of the budget. Public works plans to bring the capital improvement budget to you in September in a more detailed fashion than you have it tonight in this document. And then finally, we would propose that there be a council study session on revenue options in the fall sometime in the September or October timeframe. And by then we should have both the detailed analysis of the parcel tax and facility district options and the business license tax options. We would also anticipate bringing those to the budget and governance committee prior to that council meeting so that those could be vetted a bit prior to discussion. Next slide. So without a be happy to answer any questions or entertain any discussion or direction that you may have on the proposed budget. Thank you, Brian. Members, any questions? Vice mayor. Oh appreciate it. Ryan, can we go back to the last slide on the calendar of events? Sure. Okay. So I see the adoption of Final Budget on June 3, 2025. Correct. But I see the capital improvement program. That discussion to be happening after. As well as the review of. understand by the review of revenue options but I'm just concerned that this is coming after so we are approving a budget without definitive data again. Well, I think in the case of the capital improvement budget, what has happened as I understand from public works department is one of their key staff members left the city as they were in the process of preparing that document. And so they've asked for additional time to prepare a standalone separate capital improvement document. You do have in this document this budget, their estimate currently of projects. So I'm anticipating that most of what you'll hear in September is perhaps a little more forward looking than what's in the first two years. But again, that's the reasoning for not bringing it to you. Originally, we were planning to bring it all to you at the same time, but do the staffing issue? It was moved out. All right. Thanks for addressing that. Yes, I think I understood it all to happen before the adoption of the final budget. I appreciate the explanation. Thank you. Member Price Force. Yes, thank you, Mr. Mayor. Thank you as always, given us the adult and the room conversation. The vacancy tax, I keep bringing it up because it was a conversation that we were having, I think earlier, but it's looking like it keeps fading because it's not in a recommended list. I believe that that was something that came across through the budget advisory committee, or was it like advice because it was. It was presented to budget advisory and budget and governance, and neither one of them moved it forward back to the council. I think the reasoning as I recall was that the proceeds from that type of a tax revenue usually are earmarked for a specific purpose, like either economic development or housing. Doesn't have to be, but that's usually the case. I think that was one consideration. The other consideration was that I think both committees observed that that sort of tax because it's relatively new, it's not available. Many cities is often hard to explain to the voters and hard to pass. And I think that combination of factors that you wouldn't normally apply it to a general fund deficit and that it was didn't seem to sort of be as on point as the other four or five categories was the reason they did not recommend moving it back to the councils. That's why it didn't come back. At the end of the day, it's obviously up to the council either at this meeting or in the fall as whether you want us to explore that tax. At this point because neither committee recommended it we kind of put it on pause and the other factor there is we believe that because it is kind of a novel revenue the city would have to spend some money to study it and come up with a good revenue estimate, maybe something out or 40 or 50 grand, but because there wasn't committee support, we thought that one probably falls off the table. But again, subject to direction from you, the council may feel otherwise. Other questions? Thank you, Brian. Right, thank you. Let's now take public comment. Are there members of the public? Seeing the members of the public, let's bring this back to council for further discussion. And are we looking for any direction or recommendations? Latanya, can you clarify on this? I don't think we are. Just informational. Thank you Mayor, yes. We're not looking for any direction this time. Member Price Force. I just want to suggest that we don't close the door entirely on the vacancy tax even though it may take some work and manifest that into making, I put it in and forward to the public that in the conversations that I've had and most recently learning that some units some units and some storefronts can remain vacant. And for whatever reason, that the empty homes tax that the city of Berkeley, that they were able to pass successfully is expected to generate up to 55.9 million annually for them. And so I believe that the vacancy tax is something that would move. I think it wouldn't move the needle when it comes to our budget. as relates to anything related to utilities, being someone who has been an entrepreneur, serial entrepreneur, and understanding the live work environment that many of our residents operate in. I am not a fan of anything related to increasing utilities or video or anything that could add a a, it can increase costs for people who are living and working in Emory Bill. And so, so I just want to express again that I am not a fan of anything as relates to utilities being increased. Any other comments? Seeing none, I think we can move on from this item. There's nothing else on this agenda. The time is 705. This meeting is adjourned.